Tue, 08 Dec 2015
In the recent case of Walton and Walton v Allman  EWHC 3325 (Ch) the High Court has given welcome guidance in respect of obtaining security in the form of a charge on property and confirmed that it is possible to obtain a charge in respect of a judgment debtor’s beneficial interest in property registered in the sole name of a third party.
Mr and Mrs Walton were a married couple living at a property acquired by Mr Walton before the marriage and registered in his sole name. In 2012 Mrs Walton lost a claim against Mrs Allman for breach of contract and was ordered to pay costs. When she did not pay, Mrs Allman applied for a charging order over Mrs Walton’s beneficial interest in her matrimonial home. Contrary to Mr and Mrs Walton’s contentions at a contested hearing, the Judge found that Mrs Walton had a beneficial interest in the property, and granted a final charging order. The Judge did not quantify the level of Mrs Walton’s beneficial interest.
Mr and Mrs Walton sought, and were granted, permission to appeal, but directed that unless they disclosed documents relevant to the beneficial ownership of the property, their appeal would be struck out. Incomplete and late disclosure was made, such that the appeal was indeed struck out. Relief from sanction was refused: applying the test in Denton v TH White Ltd  EWCA Civ 906 it was found that the breach of the order was serious, significant and without good reason, and that Mr and Mrs Walton had a history of breaches which had led to the inefficient conduct of the case.
Mr and Mrs Walton again sought, and were granted, permission to appeal. Amongst various other arguments, they contended that the judge should have granted relief because the court had no jurisdiction to make a charging order in respect of Mrs Walton's beneficial interest in the property without first quantifying the precise extent of the interest, since the property was registered in the sole name of Mr Walton.
The Court dismissed the appeal.
Pursuant to the Charging Orders Act 1979, a charging order could be made over a judgment debtor's beneficial interest in land and CPR 73 simply required that the charged asset be identified and details of the judgment debtor's interest be given. Delay in obtaining a charging order could be fatal for a creditor, and the purposes of the 1979 Act might well be defeated if the outcome of proceedings to determine the extent of the judgment debtor's beneficial interest had to be awaited. The court would have to quantify the interest if and/or when the creditor sought to enforce the charge by way of an order for sale, but there was nothing inappropriate in resolving that question after the charging order had been made final.
This case neatly demonstrates that the absence of a judgment debtor’s name on the legal title to property is by no means an automatic bar to obtaining security in the form of a charging order. The absence of legal ownership sharply increases a creditor’s need for cogent evidence of the judgment debtor’s beneficial ownership but, in an appropriate case, security can still be obtained.
This article was written by No5 Chambers Barrister, Yasmin Yasseri. To view Yasmin's profile please click here.